Page

Racking Up Credit Rewards

Whether or not redeeming rewards for merchandise make sense for you will depend on the individual item.

Pros: If you never plan on redeeming for travel, using your rewards for items you need or want might be a good decision. And even if it’s not the absolute best value, there’s no such thing as a bad award.

Cons: You have to do some price comparison checks to see if it’s a good deal for you. Typically when you redeem your rewards for something else such as travel or gift cards, you’ll get more for the value.

Program Considerations

Consumers can often fall into the trap of being lured in by ads when searching for a great rewards card, so it‘s important to understand rewards program requirements.

According to an article by CNBC, it’s easy to focus on the big rewards highlighted in the ads and ignore the rules that spell out how you earn them and how you can lose them. Here’s what to look for:

  • Spending Tiers: You may need to spend a certain amount within a specific time period to get that big sign-on bonus. For example, the Capital One Venture Rewards Card offers new customers a 10,000 mile bonus, but only if they spend $1,000 on purchases within the first three months of getting the card.
  • Registration Requirements: Rewards cards often offer bonuses on certain purchases, such as gas or groceries, each quarter, which may require you to first sign up for these bonuses. Forget to sign-up and you'll miss out.
  • Limits: With many rewards credit cards, you can only claim a certain number of rewards points each calendar year.
  • Penalties: Some banks, like American Express, with revoke your monthly rewards and may charge a fee to reinstate those rewards if you miss a payment.
  • Terms Can Change: Rewards programs can frequently change and if you’re not mindful of new changes, you may lose some of your rewards. Check the monthly bill inserts for changes to the program.
  • Annual Redemption Considerations: Some rewards credit cards will come with a bonus of 50,000 points, for example, but the cardholder may only be able to redeem 30,000 of those the first year, then wait to receive the other 20,000 after their card anniversary date. That’s why it’s always wise to check your terms and conditions.
  • Rewards cards typically come with a higher interest rate than general purpose credit cards, so they're best for people who pay off their balance in full each month. They may also have an annual fee.

Now that you have a full understanding of how to redeem your credit card rewards and the program requirements, it is time to figure out how to find and get the most out of a rewards card.